2023 (12) TMI 620 - HC - Benami Property

Prohibition of Benami Property Transaction - Applicability of provisions of Section 5 of the Amended Act, 2016 - funds infused into the shell companies by multiple layering in the guise of share capital or loan from other Marg Group of Companies had actually flown only from Marg Limited directly and finally, one of the shell companies would re-invest the funds so routed in immovable properties - Initiating Officer had reasons to believe that the arrangements made by the respondent with various shell companies is a benami transaction within the meaning of Section 2 A (9) of the Prohibition of Benami Property Transactions Act, 1988 - as contended on the side of the appellants that Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 will have retrospective effect and therefore, the common order passed by the Tribunal, to the contrary, is liable to be interfered with. HELD THAT - In view of the above, this court is of the opinion that as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd 2022 (8) TMI 1047 - SUPREME COURT holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced. It is to be noted that in the Review Petition 2023 (1) TMI 1327 - SC ORDER filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd 2022 (8) TMI 1047 - SUPREME COURT delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd , cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals.

Summary

Issues Involved:
1. Validity and correctness of the common order dated 15.12.2022 by the Appellate Tribunal for Benami Property Transaction Act, 1988.
2. Applicability of the Prohibition of Benami Property Transactions Act, 1988 as amended in 2016 to transactions prior to the amendment.
3. Procedural adherence and burden of proof in benami transactions.
4. Prospective vs. retrospective application of the Amended Act, 2016.

Summary:

1. Validity and Correctness of the Common Order:
The appellants questioned the common order dated 15.12.2022 by the Appellate Tribunal for Benami Property Transaction Act, 1988, which dealt with the applicability of the Amended Act, 2016. The Tribunal concluded that proceedings for prosecution and confiscation initiated prior to the amendment were not legally sustainable, citing the Supreme Court decision in Union of India vs. M/s. Ganpati Dealcom Private Limited.

2. Applicability of the Amended Act to Prior Transactions:
The Tribunal, relying on the Supreme Court's decision in Ganpati Dealcom, held that the amended provisions of the Act, being punitive, could only be applied prospectively. The transactions in question occurred before the amendment date (01.01.2016), and thus, the Tribunal allowed the appeals, stating that the proceedings initiated under the amended provisions were not sustainable.

3. Procedural Adherence and Burden of Proof:
The appellants argued that the Tribunal failed to consider the unique facts of the case and the procedural adherence required under the statute. They contended that the burden of proof regarding benami transactions lies with the appellants, as established in Valliammal vs. Subramaniam. The Tribunal did not delve into the factual matrix and allowed the appeals on technical grounds.

4. Prospective vs. Retrospective Application:
The Tribunal observed that the amendments brought by the 2016 Act were substantive and not merely procedural. Therefore, the punitive provisions under Section 5 of the 2016 Act could not be applied retrospectively. This view was supported by the Telangana High Court in Nutrient Marine Foods Ltd. vs. Adjudicating Authority, Chennai, and upheld by the Supreme Court in Assistant Commissioner of Income Tax vs. Nutrient Marine Foods Limited.

Conclusion:
The High Court found no reason to interfere with the Tribunal's order, which was based on the Supreme Court's decision in Ganpati Dealcom. The appellants were granted liberty to proceed further based on the outcome of the pending review petition before the Supreme Court. All Civil Miscellaneous Appeals were disposed of without costs.